ACA Subsidies Will Help Struggling Americans Afford Health Insurance

Beginning in 2014, if you are a single person making less than $44,680 annually (in 2012 dollars) or have a family of four that makes less than $92,200 per year (in 2012 dollars), and your employer doesn’t offer affordable coverage, you may be able to get some help paying for your health insurance premium. 1

Tax credits from the federal government will be available for people whose income is between 100 and 400% of the federal poverty level who are not eligible for other affordable coverage (through an employer, for example). The credits are based on insurance plans at the “silver” level in the area where a person lives. For insurance at a higher level, the insured will have to pay the additional cost.2 Subsidies must be used for health plans purchased through the exchange.

The tax credit is “advanceable,” which means that instead of waiting for tax time to get your money in a lump sum, it can be “advanced” to you so you can lower your insurance premium each month. You don’t have to pay and then wait to be reimbursed. The tax credit is available as soon as you enroll in a plan. It can be paid directly to your insurance company to offset your premium. The tax credit, unlike a tax deduction, reduces the amount of tax you owe dollar for dollar.

The Affordable Care Act (ACA) states that people earning 133% of the federal poverty level or less are not eligible for these tax credits, but are instead eligible for Medicaid. However, in Wisconsin, the state legislature and the governor chose not to expand Medicaid, also known as BadgerCare Plus, to this level.3 Lawmakers instead reduced eligibility for Wisconsin’s Medicaid program from 200% to 100% of the poverty level and added eligibility for childless adults.

The remaining 33% of Wisconsin residents above the 100% threshold are eligible for tax credits. They, like other subsidized insurance shoppers, must get their health insurance through the state’s health insurance exchange to take advantage of them. Low-income children are eligible for the Children’s Health Insurance Program (CHIP). People can apply for Medicaid or CHIP right now without waiting for the exchanges to open.

Those who qualify for tax credits may also qualify for reduced cost sharing to reduce their out-of-pocket costs.2 People whose incomes are up to 250% of the poverty level may be able to take advantage of reduced cost sharing for copays, coinsurance, and other expenses. When you apply for coverage through the exchange, you’ll find out if you’re eligible for these savings.4 If you’re eligible, you must choose a silver plan to get the cost-sharing savings.

If your employer does not offer coverage, or if it’s too expensive, you can find consumer help online at www.healthcare.gov.